Competition Policy and Consumer Rights: Bangladesh Scenario. M. Abu Eusuf Assistant Professor, Department of Development Studies, University of Dhaka Unnayan Shamannay, 16 April 2006. Competition Policy. Intervention by public authorities for ensuring competition in the markets.

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Competition Policy and Consumer Rights: Bangladesh Scenario

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There isno effective legal provisiondesigned to protect the interest of the consumers in Bangladesh. Besides, there is no legal entity to oversee the trading practices of business firms. These tasks are complicated. On the one hand, it needs to be ensured that consumers are not cheated, and on the other hand special care should be taken so that private firms and business do not feel regulatory powers are excessive

Civil society groups acting on behalf of the consumers are almost non-existent in Bangladesh. The existing Consumers Association of Bangladesh (CAB), has not been particularly very effective in raising the concerns of the consumers

As a result, policy makers most often seestrong lobbyingin favour of demands for protection, they hardly encounter with popular public demands for not grating those protective measures

In Bangladesh sectors such asrailways, telephone, and other public utility services have generated suchanti-competitive structuresthat not onlyinhibits modernisationof these services but also hinder private investment into these sectors

In recent times private sector has entered into the business of cellular phone, butcompetition has been restricted toa few firmsonly. Thisallowsthe state owned BTTB (or Bangladesh Telegraph and Telephone Board) to continue inefficiently

Though a regulatory commission has been set up for the telephone sector. However, it is still in infancy and yet to acquire any teeth

Overall policy framework of the country acts as hindrance to the promotion of an efficient and competitive market mechanism in Bangladesh

The regulatory framework in the country is yet to be developed (only telephone sector though inefficient)

Absence of autonomous and independent effective and efficient judicial system hampers to ensure a favourable business climate for competition.

Currently the country’s legal system is burdened with more than half a million cases. Such a slow and inefficient judicial system increases the costs of litigation

There are other sectors (e.g., telecommunication, power generation and air transport) which are gradually being opened up and some participation of the private sector is taking place. However, it has been alleged that these are being done in a non-transparent and unpredictable policy environment resulting in increased business transaction costs and widespread rent-seeking opportunities.

Nationalised commercial banks (NCBs) are burdened with bad loans and loan defaults. Largely because of these bad loans the spread between lending and deposit rate is very high in Bangladesh.

When private Banks were allowed to operate it was hoped that they would charge lower interest rates on lending as they did not have to start with bad loans. It was found that private banks’ price loans follow those of the NCBs, who act as the price leaders. Such anticompetitive behaviour was responsible for allowing the NCBs to become much bigger than the private banks and also more inefficient.

Access to government’s development fund has been restricted for the private banks. Moreover, NCBs also operate in such activities where private banking isabsent(such as agriculture and rural development projects). This also reduces the competition between the public and private sector

In Bangladesh, local manufacturing companies often appoint one sole distributor, in a region of the country, allowing it to dictate or manipulate prices in that region. Often, foreign manufacturing companies even go so far as appointing one sole distributor or agent for the entire country.

This sole distributor or agent establishes a monopoly for that product and charges prices according to their whims. They never display company price lists, and may even refuse to show it if a customer asks to see it. As an example, H.S. Enterprise has been the sole distributor – in Bangladesh – of Honda Motor Company Limited, Japan, for 20 years, and the firm declares its status as a sole distributor in public. These types of practices are surely anticompetitive.

City Cell is a company involved in the mobile telecommunication business. When a consumer takes a mobile phone connection from City Cell, they have to pay for the particular mobile set supplied by the company. In this case, the consumer is deprived of having the option of another mobile set. This is surely a tying arrangement. So, this practice may also be considered as anticompetitive.

Competition Policy is not panacea for competitiveness. This depends to a significant extent on factors such as human capital, institutional infrastructure, ethical business codes and commitment to good governance. The civil society too has a role to play in raising consciousness regarding vices of anti-competitive practices. Education, media and social organizations have a role in mobilizing a society for appropriate competitive regime.

There is also adanger of excessive competition, which may have adverse socio-economic implication. There is, therefore, a need for open public debate on these issues and continuous monitoring of the impact of competition on theweaker sectionsof the economy (particularly on SMEs). Simultaneously, there is need for realistic assessment of the extent to which MNCs are following the disciplines of competition law